Correlation Between Baron Real and Baron Wealthbuilder

Can any of the company-specific risk be diversified away by investing in both Baron Real and Baron Wealthbuilder at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Baron Real and Baron Wealthbuilder into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baron Real Estate and Baron Wealthbuilder Fund, you can compare the effects of market volatilities on Baron Real and Baron Wealthbuilder and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Baron Real with a short position of Baron Wealthbuilder. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Real and Baron Wealthbuilder.

Diversification Opportunities for Baron Real and Baron Wealthbuilder

0.83

Correlation Coefficient

Baron Real  Baron Wealthbuilder

Very poor diversification

The 3 months correlation between Baron and Baron is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Baron Real Estate and Baron Wealthbuilder Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Wealthbuilder and Baron Real is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Baron Real Estate are associated (or correlated) with Baron Wealthbuilder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Wealthbuilder has no effect on the direction of Baron Real i.e., Baron Real and Baron Wealthbuilder go up and down completely randomly.

Pair Corralation between Baron Real and Baron Wealthbuilder

Assuming the 90 days horizon Baron Real is expected to generate 1.18 times less return on investment than Baron Wealthbuilder. In addition to that, Baron Real is 1.02 times more volatile than Baron Wealthbuilder Fund. It trades about 0.03 of its total potential returns per unit of risk. Baron Wealthbuilder Fund is currently generating about 0.04 per unit of volatility. If you would invest  1,476  in Baron Wealthbuilder Fund on February 10, 2024 and sell it today you would earn a total of  322.00  from holding Baron Wealthbuilder Fund or generate 21.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.8%
Values	Daily Returns

Baron Real Estate  vs.  Baron Wealthbuilder Fund

Baron Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Real Estate has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Baron Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron Wealthbuilder

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron Wealthbuilder Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Baron Wealthbuilder is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Baron Real and Baron Wealthbuilder

The main advantage of trading using opposite Baron Real and Baron Wealthbuilder positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Real position performs unexpectedly, Baron Wealthbuilder can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Baron Wealthbuilder will offset losses from the drop in Baron Wealthbuilder's long position.

The idea behind Baron Real Estate and Baron Wealthbuilder Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.